FIDDLING WHILE ROME BURNS IN KENTUCKY AND ILLINOIS

Barron’s newspaper (August 27, 2012) has an article titled “Best & Worst Run States.” The publication ranks the 50 American states on the soundness (or lack thereof) of their balance sheets. Barron’s explained the underlying calculation: “The ranking is based on debt and unfunded pensions compared with state GDPs” (gross domestic products).

According to the ranking, Kentucky is the fourth worst-run state (rank #47/50) and Illinois is the second worst-run state (rank #49/50). Kentucky has a debt + pension liability to gross domestic product ratio of 15.7% and Illinois’ ratio is 16.3%. By contrast, the best-run state, South Dakota, has a ratio of 1.0%.

Kentucky state elected officials, past and present, have repeatedly failed to provide a boost to the state’s horse racing and breeding industry by legalizing video lottery terminals at the racetracks. The lunacy is manifest. While Kentucky’s finances have deteriorated to a precarious level, elected officials have said “thumbs down” to a significant revenue source. In so doing, they have also badly wounded the state’s racing and breeding industry, which is a strong but imperiled economic enterprise.

Similarly, although Illinois has a balance sheet that, charitably speaking, could be characterized as being full of “junk debt,” elected officials (mainly the incumbent governor) spurn expanded gaming, including at horse racing tracks.

Additional gambling is not a panacea to correct past profligate public spending, but it is one source of desperately needed funds for state coffers. Some of the folks, in Kentucky and Illinois, standing in the way of this revenue stream, are sad examples of people getting what they vote for. The double whammy for future generations will be higher taxes and a greatly diminished racing and breeding business. That takes some doing, even for dumb clucks.